United States District Court, N.D. California, San Jose Division
ORDER GRANTING DEFENDANT EXPERIAN'S MOTION TO
DISMISS FIRST AMENDED COMPLAINT WITH LEAVE TO AMEND [RE: ECF
LABSON FREEMAN United States District Judge
Sheldon Smith sues Defendant Experian Information Solutions,
Inc. (“Experian”) for violation of the Fair
Credit Reporting Act (“FCRA”), 15 U.S.C. §
1681. Experian moves to dismiss Plaintiff's first amended
complaint (“FAC”) pursuant to Federal Rule of
Civil Procedure 12(b)(6) for failure to state a claim upon
which relief may be granted. For reasons discussed below, the
motion is GRANTED WITH LEAVE TO AMEND.
filed for Chapter 13 bankruptcy protection on March 20, 2015,
and his plan was confirmed on October 14, 2015. FAC
¶¶ 93, 97, ECF 25. On March 3, 2016, Plaintiff
“ordered a three bureau report from Experian
Information Solutions, Inc. to ensure proper reporting by
Plaintiff's creditors.” Id. ¶ 98. He
alleges that this report (“March 2016 Credit
Report”) included eight different tradelines containing
inaccurate, misleading, or incomplete information.
Id. ¶ 99. Plaintiff neither attaches a copy of
the March 2016 Credit Report nor provides specifics regarding
the alleged inaccuracies contained therein. Id. He
asserts only that “multiple trade lines continued to
report Plaintiff's accounts with past due balances,
inaccurate balances, in collections, and/or charged off. Some
accounts even failed to register that Plaintiff was making
payments on the account through Plaintiff's Chapter 13
disputed the inaccurate tradelines via certified mail sent to
three different credit reporting agencies
(“CRAs”), Experian, Equifax, Inc., and
TransUnion, LLC on May 3, 2016. Id. ¶ 100. Each
CRA received Plaintiff's dispute letter and in turn
notified the entities that had furnished the disputed
information (“furnishers”) by means of automated
credit dispute verifications (“ACDVs”).
Id. ¶ 102.
ordered a second three bureau report from Equifax, Inc. on
June 8, 2016 (“June 2016 Credit Report”).
Id. ¶ 103. Plaintiff alleges that
“Plaintiff's credit score was well below what
accurate credit reporting industry standards would
project.” Id. ¶ 104. Plaintiff also
alleges that three furnishers, Alliant Credit Union, Stellar
Recovery, Inc. and Continental Credit Control, reported his
accounts inconsistently with industry standards. Id.
¶ 105-107. For example, Alliant Credit Union reported
Plaintiff's account as “in collections” and
“charged off, ” despite “the Court
[o]rdered treatment of its claim under the terms of
Plaintiff's Chapter 13 plan of reorganization.”
Id. ¶ 105.
filed this action on August 12, 2016, asserting violations of
the FCRA and CCRAA against the three above-mentioned
furnishers and two CRAs, Experian and TransUnion, LLC.
Compl., ECF 1. All Defendants except Experian since have been
dismissed. Experian now moves to dismiss the FAC.
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim upon which relief can
be granted ‘tests the legal sufficiency of a
claim.'” Conservation Force v. Salazar,
646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro
v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When
determining whether a claim has been stated, the Court
accepts as true all well-pled factual allegations and
construes them in the light most favorable to the plaintiff.
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681,
690 (9th Cir. 2011). However, the Court need not
“accept as true allegations that contradict matters
properly subject to judicial notice” or
“allegations that are merely conclusory, unwarranted
deductions of fact, or unreasonable inferences.” In
re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th
Cir. 2008) (internal quotation marks and citations omitted).
While a complaint need not contain detailed factual
allegations, it “must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
facially plausible when it “allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
contains two claims, one for violation of the FCRA (Claim 1)
and the other for violation of the CCRAA (Claim 2). Although
the label of the CCRAA claim indicates that it is asserted
against “Defendants, ” it is clear from the body
of the FAC that the CCRAA claim is not asserted against
Experian. FAC ¶¶ 135-144. Accordingly, this order
addresses only the FCRA claim.
FCRA claim against Experian is subheaded “Failure to
Reinvestigate Disputed Information.” Id.
¶¶ 119-120. Plaintiff alleges that after he
“disputed the accounts mentioned above” - which
the Court takes to mean the eight tradelines in the March
2016 Credit Report referenced earlier in the FAC - Experian
was required to conduct a reasonable investigation and to
delete any information that was not accurate under 15 U.S.C.
1681i-(a)(1). Id. ¶ 121. Plaintiff claims that
Experian and other CRAs were required to “send all
relevant information via an ACDV to the furnishers which they
did not do.” Id. ¶ 122. Plaintiff alleges
generally that Experian “failed to conduct a reasonable
investigation and failed to correct the misleading and or
inaccurate statements.” Id. ¶ 123.
Plaintiff further alleges that “[i]n the alternative .
. . each CRA has its own independent duty to conduct a
reasonable investigation” and actively “suppress
inaccurate information” reported by furnishers.
Id. ¶¶ 124, 125, 127. Plaintiff alleges
that a CRA would have known that Plaintiff had filed a
Chapter 13 bankruptcy petition and that Plaintiff's plan
had been confirmed based on multiple accounts on the report.
Id. ¶ 130, 131. Plaintiff also alleges that a
CRA would have known that “failure to report a CII
given that a Chapter 13 was filed” and “reporting
a past due balance post confirmation” do not comport
with industry standards. Id. ¶¶ 132-133.
moves to dismiss the FCRA claim on three grounds. First,
Experian asserts that Plaintiff has not alleged facts showing
that Experian's credit reporting was inaccurate. Second,
Experian argues that Plaintiff has not alleged facts showing
an entitlement to damages under the FCRA. And third, Experian
asserts that Plaintiff has not alleged any facts showing that
Experian's response to his dispute letter was improper.
argues that Plaintiff's claim fails because he has not
alleged facts showing that Experian's credit reporting
was inaccurate. If a consumer disputes “the
completeness or accuracy of any item of information, ”
a CRA must “conduct a reasonable reinvestigation to
determine whether the disputed information is inaccurate and
record the current status of the disputed information, or
delete the item.” 15 U.S.C. § 1681i(a)(1). In
addition, the CRA must provide notification of the dispute to
the furnisher of the information. 15 U.S.C. §
Ninth Circuit has observed that “[a]lthough the
FCRA's reinvestigation provision, 15 U.S.C. § 1681i,
does not on its face require that an actual inaccuracy exist
for a plaintiff to state a claim, many courts, including our
own, have imposed such a requirement.” Carvalho v.
Equifax Info. Servs., LLC, 629 F.3d 876, 890 (9th Cir.
2010). “Thus, even if a . . . CRA fails to
conduct a reasonable investigation or otherwise fails to
fulfill its obligations under the FCRA, if a plaintiff cannot
establish that a credit report contained an actual
inaccuracy, then the plaintiff's claims fail as a matter
of law.” Doster v. Experian Info. Sols., Inc.,
No. 16-CV-04629-LHK, 2017 WL 264401, at *3 (N.D. Cal. Jan.
20, 2017) (internal quotation marks and citation omitted).
Carvalho, the Ninth Circuit noted that it previously
had “explained that an item on a credit report can be
‘incomplete or inaccurate' within the meaning of
the FCRA's furnisher investigation provision, 15 U.S.C.
§ 1681s-2(b)(1)(D), ‘because it is patently
incorrect, or because it is misleading in such a way and to
such an extent that it can be expected to adversely affect
credit decisions.'” Carvalho, 629 F.3d at
890 (quoting Gorman v. Wolpoff & Abramson, LLP,
584 F.3d 1147, 1163 (2009)). The Ninth Circuit went on to
affirm “‘the maxim of statutory construction that
similar terms appearing in different sections of a statute
should receive the same interpretation, '”
id. (quoting United States v. Nordbrock, 38
F.3d 440, 444 (9th Cir. 1994)), and to cite with approval a
First Circuit case, Chiang, which the Ninth Circuit
summarized as “deeming the term ‘inaccurate'
in section 1681i(a) to be ‘essentially the same' as
the term ‘incomplete or inaccurate' in section
1681s-2(b), ” id. (citing Chiang v.
Verizon New Eng. Inc., 595 F.3d 26, 37 (1st Cir. 2010)).
Relying on Carvalho, district courts have
“applied this ‘patently incorrect or materially
misleading' standard to claims arising under various
provisions of the FCRA that involve the accuracy of
information.” Prianto v. Experian Info. Sols.,
Inc., No. 13-CV-03461-TEH, 2014 WL 3381578, at *3 (N.D.
Cal. July 10, 2014). In particular, courts in this district
have applied the “patently incorrect or materially
misleading” standard to the inaccuracy requirement
under § 1681i. See, e.g., Banneck v. HSBC Bank USA,
N.A., No. 15-cv-02250-HSG, 2016 WL 3383960, at *6 (N.D.
Cal. June 20, 2016); Prianto, 2014 WL 3381578, at
argues that he has alleged inaccuracies in his credit reports
under the above standards. The Court disagrees based ...